The newest Xbox live update is in the process of filtering out to the masses, and it brings with it some pretty sweet features. It'll offer downloadable Games on Demand (full games!), new Netflix options and a bunch more.

Games on Demand looks pretty great; you'll be able to download full games, including manuals, and you'll have access to them forever, meaning free re-downloads in case you delete them. The new Netflix options include "movie parties" that sound sort of awkward, wherein you and a bunch of other avatars sit around and share digital popcorn (we are not making this up, see the press release below). But it'll also give you more control over your Instant Watch queue and supposedly give you smooth playback even with a finicky Internet connection. No luck yet on the Facebook, Twitter, Last.fm, or Zune video additions we were promised at E3.

A warning: This is rolling out in waves, with a select preview first. Games on Demand won't be available until early August, and even that's only in the preview. We don't have an exact date for the wide release, though it'll almost certainly be in late summer. Check out the presser below for more details.

What does this Xbox LIVE Update include?

Netflix Updates
Now you can watch movies with your friends no matter where they are and manage your queue from the comfort of your couch.
· Movie Parties – Xbox LIVE Gold members can sit together in a virtual theater with up to seven friends no matter where they are while your Avatars watch a movie, flirt or even throw popcorn at each other.
· Manage Your Queue – Browse the Netflix Instant Watch video catalogue, choose from the most popular movies and genres and add to your queue all from the comfort of your couch – no computer required.
· Enhanced Playback Experience – Enjoy a smooth viewing experience when your internet bandwidth fluctuates.
· Friends Info – Richer information is now displayed in the Friends channel and in the Guide showing what you and your friends are doing.

Avatar Marketplace
Express yourself! Deck your Avatar out with the latest clothing and props from the top brands and game franchises.
· Clothing – Download premium items, including branded apparel from your favorite fashion labels and Xbox 360 games such as "Halo."
· Props – You can now equip your avatar with animated items they can carry around and interact with.
· Awardables – The ability to earn Avatar clothing and props as rewards within games has been added. Please stay tuned for an update on supporting titles.

Games on Demand— Please note that Games on Demand will be available in the preview beginning early August.
Enjoy 24 x 7 access to a growing online library of popular full game titles on Xbox LIVE whenever you want them, in the comfort of your living room.
· Purchase Options – Browse and download a great selection of full Xbox 360 games using Microsoft Points, direct debit, or credit card.
· Game Manuals – Game manuals for Games on Demand titles can be viewed, downloaded or printed on Xbox.com.
· It's Yours Forever! – As with other Xbox LIVE content, Games on Demand titles are linked to your Xbox LIVE account, so you can delete and re-download anything you have already purchased to the same console or another console.

User Ratings
User ratings help you find games that other people think are awesome!
· Rate it – You can now rate every game on the Xbox LIVE Games Marketplace using a 5-star system.
· Sort and Find it – Now you can easily find the games that everyone's been raving about by visiting the Top Rated games in the Browse All category of Xbox LIVE Games Marketplace.

Xbox LIVE Parties
Everyone loves to Party! Check out the new and improved Xbox LIVE Party features.
· Party Reconnections – If you are accidently disconnected from your party, Xbox LIVE will automatically reconnect you.
· Streamlined Party Invites – Invites are now just one click away! No need to click through multiple screens to get all your friends together.

Video Display Options
We've made it easier for you to see your entertainment in the highest resolution possible on your TV using an HDMI connection.

* Display Discovery – Make sure you can see and hear your entertainment in the highest resolution and sound quality possible with the option to override and select audio and video formats independent of the information your television sends to your Xbox 360 console.

Other Improvements
We're always listening to you for feedback, and this Xbox LIVE update will include numerous dashboard updates.
· Gold Member Veterans – Xbox LIVE Gold members get to show it off with a stamp on your Gamer Card that tells people how long you've been a Gold member.

* Indie Games – Xbox LIVE Community Games has been renamed Xbox LIVE Indie Games. We feel this new name better represents the independent spirit of these titles.

· Achievement Browser – We've revamped the Achievements browser so it's now easier to read through all the achievements while playing a game. You can now also launch a game directly from the browser.
· Achievements Tracking – A new view inside the profile panel which includes a summary of Achievements earned across all the games played, and shows of all your completed games.

· Voice Messages – No more blank voice messages! When recording a voice message, a warning will pop up if no audio is detected.
· Friends List Sorting – It's now easier to find your friends! Find and sort your friends by activity, Gamertag or online status by pressing the Y button while viewing the friends list in the Guide.
· Memory – Time stamps now appear in the memory area, which particular handy when managing saved games.

Account Management
We've made some changes to make your life easier.
· Subscription Notification – If your Xbox LIVE subscription is about to run out, you will now be notified when you sign into Xbox LIVE.
· Updates for Invalid Windows Live IDs – If the Windows Live ID you provided has expired, you will now be prompted to update it the next time you sign into Xbox LIVE.
· Account recovery – We've enhanced the account recovery process to make it faster and more reliable.

What does this Xbox LIVE Update not include?

The following features will be coming in future Xbox LIVE updates, which we'll be sure to let you know about.
· Facebook
· Twitter
· Zune video and 1080p Instant On
· Last.fm